Paris-based music streaming firm Deezer have made history by securing the biggest round of investment funding for a start-up ever seen in “la République Française.”
In news that will provoke envy amongst business development associates and chief revenue officers throughout the media world, Deezer has just attracted funding of $130 million (€100 million) from Access Industries (which owns Warner Music Group).
Deezer began in France in August 2006 as a totally web-based music streaming firm, offering instant access with no downloads or software. Users can play their favorite tunes on tablets, smartphones, TV and even in the car. It now has 18 million licensed tracks and has been striving to break out of local boundaries by expanding its user base to include international customers.
Innovation and competition
Start-ups in the music technology industry have shown much ingenuity in their quest to corner niche spaces. SoundHound’s stratospheric success is a case in point, although competition can be exceptionally keen in the music streaming arena (just witness the titanic struggle between Spotify and Pandora, for instance). And, with mobile platforms becoming ever-more available to the masses, it’s a fair bet that the competition will get even fiercer.
A boon or a millstone?
So might there be a downside for Deezer in such massive investment coming from one source? Music companies, led by Warner Music Group, will undoubtedly have a massive influence on the company’s future. This may be all for the best, but streaming firms are known to be heavily dependent on their music industry deals, a prospect which could yet bite Deezer on its derriere. When the contract comes up for renewal, the negotiation process is almost sure to be distinctly one-sided and may propel the company in directions its founder may not wish to pursue.
Even so, Deezer has set its sights high. With 30,000 SmartRadio channels and 26 million users, it has already launched in 100 of the 200 countries it targeted last year. Deezer CEO Alex Dauchez commented, “This investment comes at the right moment to change the scope of ambition. We have proved the model. We have proved that in some countries that have never monetized before we are currently generating revenue for the music industry. In terms of volume, the big steps are in front of us.”